Deductions & Credits Mastery

Deductions & Credits Mastery

This lesson provides comprehensive training on federal tax deductions and credits, with a focus on accuracy, eligibility verification, and IRS due diligence requirements.

All preparers must complete this lesson prior to claiming deductions or credits on any client tax return. Improper handling of deductions or credits is one of the most common causes of IRS audits, penalties, and preparer sanctions.

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Purpose of This Lesson

The purpose of this lesson is to ensure tax preparers can confidently identify, evaluate, and properly apply deductions and credits while remaining compliant with federal regulations and firm policies.

This lesson reinforces the difference between deductions and credits, proper documentation standards, and required verification procedures.

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What This Lesson Covers

This lesson includes instruction on:

• The difference between deductions and credits and how each impacts tax liability

• Above-the-line versus below-the-line deductions

• Standard deduction versus itemized deductions

• Common federal credits and eligibility requirements

• Documentation required to support deductions and credits

• Due diligence responsibilities when claiming refundable credits

• Common errors that result in disallowed claims or audits

All examples and explanations reflect current tax law and approved office standards.

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Preparer Responsibilities

When applying deductions and credits, preparers are required to:

• Verify eligibility through questioning and documentation

• Avoid assumptions or unsupported claims

• Request and review proof for all applicable deductions and credits

• Accurately document notes within the client file

• Decline claims that cannot be properly substantiated

Preparers may not rely solely on client statements when documentation is required.

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Compliance Notice

Deductions and credits claimed without proper verification may expose both the client and the preparer to IRS penalties, repayment demands, or audit review. Failure to follow due diligence requirements may result in disciplinary action or loss of preparation privileges.

Completion of this lesson is mandatory before independently applying deductions or credits on client tax returns.